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On this episode of The Full Desk Experience, we dive into the world of staffing and recruiting with industry principal Kortney Harmon and guest Chris Hesson. They share insights on the secret to staffing success, calculating bill rates, and the shift in the talent market. We also discuss the importance of flexibility in the workforce and the opportunities for expansion in niche spaces. Join us as we explore how to develop thriving staffing practices in your organization and discover valuable tips for success.
[00:03:20] Kortney Harmon and Chris Hesson discuss the benefits of expanding a direct hire business model into a staffing practice and offers tips for success.
[00:09:03] Remote work is becoming more popular and flexible work arrangements are important. Ask candidates and clients if they are interested in flexibility without using the term “contract staffing”. Contract staffing assignments can also last longer than expected.
[00:12:09] The workforce is changing as more people retire, and younger people prefer flexibility and side hustles. Companies need to adapt and offer diverse solutions to retain clients.
[00:20:35] Building recyclability is important. Specialize in a niche space, communicate regularly with contractors, and tag and define market segments in your ATS.
[00:27:23] Recruiting is about problem-solving through identifying the client’s core issue and offering staffing or direct placement solutions. Understanding client pain points is key to determining the right solution for short and long-term projects. Having varied solutions improves profitability.
[00:32:49] Set goals for contract staffing success, hold yourself accountable and plan. No easy path to success.
[00:39:56] Understanding bill rates and profit margins in the technology industry for contract workers. Importance of setting percentage goals and knowing clients. Success stories of long-term contractors.
[00:45:17] Recruiting firms need to prepare for an increase in staffing demand as direct placement demand decreases. They can expand into new departments, segments, or similar skill sets within their existing client base to pivot and keep a consistent client base.
Chris Hesson [00:00:00]:
Ultimately, recruiting was born out of this concept of management consulting, which means as a recruiting firm or staffing firm, you are there to solve problems for your client. Now, the problems most often are solved by having the right people, but you are still identifying problems. You are still trying to find out what is the solution. And Chris staffing solution is direct placement the solution?
Kortney Harmon [00:00:22]:
Hi, I’m Kortney Harmon, Staffing and Recruiting Industry Principal at Crelate. Over the past decade, I’ve trained thousands of frontline recruiters and have worked with hundreds of business owners and executives to help their firms and agencies grow. This is the full desk experience where we will be talking about growth blockers across your people, processes and technologies. On today’s episode, we’re going to talk about the not so scary world of staffing. This conversation could be geared mainly towards those offices that may have a direct hire or perm specialty, but maybe you’re looking for diversification in your business, or maybe you’re starting up your own firm now as we speak, and you’re looking for really good advice and motivation. This conversation on today’s topic is food for thought around. That to give you creativity, especially now in shifting market cycles. My goal at the end of today is that we’re going to give you some things to marinate on and you can take a look at your current organizations to say, are we doing this? Can we do this? Could we do this better? There are many listeners that are going to be staffing focused as well. Please don’t tune out. You could reverse engineer this whole conversation as well to make you think about your business models today and what your future might look like. When you think of your business model today, it’s inevitable that there have been changes in the past year and there are bound to be more changes in your future. I encourage you to take a deep moment to think about this topic and have an open mind. How could you be more to the clients that are bringing in the most revenue for you? What could you do creatively to adjust from this overcorrection that we might be seeing in the market today? Shameless plug the idea of an overcorrection is not actually mine. That is Tom Herbs. He actually was on our FDE Industry spotlight that dropped last Thursday. If you haven’t listened to you must so take, I think, 42 minutes out of your day to tune in. He had such amazing takeaways throughout that entire episode. With all of that being said today, I have brought one of my favorite all time people with me to today’s workshop. Chris Hesson has had more than a decade recruiting himself and has worked with and supported hundreds of staffing and recruiting firms around the globe. Chris brings hands on knowledge of how leaders use ATS, should use ATSs, and the difference between the two. He currently works with our organization and many others during implementation and setup, he sees what firms are doing right with their system, what’s lacking, and how they can do better. I love Chris perspective and the insights he brings. So, Chris, thank you so much for joining us today.
Chris Hesson [00:03:12]:
Thanks so much for having me.
Kortney Harmon [00:03:13]:
Of course. I always love you here and we probably could talk for more than an hour. We have to stick to an hour today.
Chris Hesson [00:03:19]:
We got this.
Kortney Harmon [00:03:20]:
I got it. That was great. I love it. So I am so excited to get someone on here that has the same I don’t even know if this is a word, but nerd out ability as I do when it comes to this topic. I know in my experience, I’ve had so many offices come to me to ask what they can do differently, either to gain more market share, get more revenue without starting a new additional vertical, and honestly, there’s no better time to talk about this than now. So we’re diving into that not so scary part of staffing, how you can start up or develop staffing practices in your organization. I’ve heard excuses from offices that I’ve worked with that I can’t possibly start a staffing practice due to lack of time or lack of resources or frankly, they’ve started it and it’s just not going as well as expected because of lack of tools and measurement. So in today’s episode, Chris and I are going to uncover where many organizations go wrong when focusing on staffing and how to develop a thriving strategy for your organization, all while ensuring your tech stack can support your processes and initiatives to unlock success for your teams. Now, for those of you in today’s live event, we’ll be providing a checklist around our conversation today, so no frantic notes needed and all of you listening to the podcast, you’ll be able to find that checklist in the show notes. So before we get started and I ask Chris all the questions and we have amazing conversation, I want to do a quick poll with our audience. So get your mice ready. I promise there’s only one today, but it’s going to give us an idea of who our audience members are today. So, Katie, when you’re ready, if you could throw up our question, it’s really the idea. What is your current business model when it comes to how you place your talent today? Do you only run direct hire and perm placement? Do you only run staffing? Do you run both but you’re looking for tips? Or maybe you just run both successfully and you’re here to see what you can gain? We have one audience member who runs both successfully. Awesome. Thank you so much for your honesty. To give us an understanding of where we are today, we have a smidge more 51% that run both, but they’re looking for tips, so that’ll give us a good idea. So let’s go ahead and get started. Chris, whenever we’re thinking of staffing and maybe we have either that split or there’s a lot of direct hire and they’re looking to add that staffing arm. What are some primary advantages for a firm to expand their direct hire business model as a staffing practice? Why should they do it? What are the benefits? Give me your insights.
Chris Hesson [00:05:48]:
So for those of you who have been in this business for more than two years, you have ridden that roller coaster all the way to the top. You’ve seen it go all the way to the bottom. One of the best ways to even that road out is diversification in your product offering. And that’s really what we’re looking at from a staffing and direct placement standpoint. Direct placement, which I came from, I love you get a nice huge fee, ideally all at one point and then shake your hands, you’re done with it. But then you have to wait until you get the next check and wait until you get the next check and you’re constantly writing this up and down wave and if there’s a couple of months where you don’t get that placement check, then you start looking around wondering what’s going on? What am I going to do next? Contract staffing gives you a way to balance that out. So you’re taking and almost have an annuity from your business where you are getting regular payments over an extended period of time. So the biggest thing I can say as a benefit from a firm is that financial stability and maybe even financial sanity for those who are running a desk, leading a team, managing an entire firm, as far as you’ve got this steady income that’s always coming through and giving you that value add to your business.
Kortney Harmon [00:06:58]:
I love that. I think that’s great. And as you’ve talked to offices too, across the globe, do you think that people, they get reliant on one line of business sometimes like this is what I’m comfortable with, I don’t want to go outside of that.
Chris Hesson [00:07:10]:
What are your I’m glad you brought up comfortable because I think that’s exactly what the problem is. You get comfortable with a certain way of working and for those of you who grew up or live in that per employment space, contracting and staffing can feel very uncomfortable. It moves fast. If you’re used to having a much longer sales cycle, working on a project where you’re vetting large number of candidates and it taking 6812 weeks, hopefully not more than that, to make a direct placement, staffing is very different. You hit the ground, you might make a placement within two days, but you’re now getting that annuity or that weekly amount once they start. So that speed I think, is often scary to a lot of people operationally. If you look at the difference between staffing, especially if, well, how am I going to be the employer of record for different firms? Are there partners I can work with? How do I do that? Do I have to have this huge bank role to be able to pay these contractors or employees once they are placed? Because I’m not able to collect from my client maybe for 30 more days. So there’s a lot of unknowns there that I think people look at from an operational standpoint as well. And it’s scary. Trying something new is going to be scary. It is also 100% completely worth it.
Kortney Harmon [00:08:21]:
We’re going to dive into that operational and all the other pieces too as we go along through this process. So keep that in mind. I love comfortable. It’s a good word for today’s discussion. So as we think of the advantages right. I think it also goes to the idea, you mentioned this, but market shifts when direct hire is booming, usually staffing is down and vice versa. So it’s like leveling the scale and we have the ability. And I think where people have Chris misconception is really the idea, well, I need to go start this, I need to go find clients, I need to go find candidates. And I know we’re going to dive into this, but what do you tell people whenever they say, well, I have to go find a whole new line, new candidates, new clients. How do you reassure them that it’s not starting?
Chris Hesson [00:09:03]:
First off, you don’t. That’s the easiest thing. Especially over the last several years in this post COVID area, we’ve seen more and more businesses are moving remote. Flexibility is becoming more and more important. Every candidate you speak with one easy question to ask them, hey, over the last couple of years, I’ve seen more and more candidates who are interested in flexibility, the ability to choose and work on the projects they want. Is that something you’d be interested in hearing about? That’s it. You don’t even have to use the words it’s contract or contract staffing. This is work flexibility. And then for those clients, you ask them a parallel question. More and more companies I’m talking to are looking for a flexible workforce, the ability to scale up and scale down as the macroeconomic trends shift. Is that something you would be interested in? All you have to do is prime the pump with these little questions and you’re going to be able to identify who are those candidates that would be right for having conversations, who are those clients that would be ripe for having those follow up discussions on it’s not something brand new. Also, it’s a great transition. You may have someone who they’re waiting for that perfect role. On the perm side. They don’t have it right now. Great. Fill the gap with them for three months, six months on a contract basis or longer? One of the last contract staffing assignments I worked on, I saw someone placed on a six month assignment, and I think they were there for seven years. Like staffing does not necessarily mean short term, and it blows my mind that companies will spend and pay that bill rate for seven years where they could have hired the person for cheaper, but they’ll do it, so don’t get scared off by it.
Kortney Harmon [00:10:34]:
Don’t give away all the goods there. I love that you mentioned something about flexibility. I obviously am a consumer of all things content, especially with what we do. And I’ve heard some interesting stats. I listened to a podcast the other day and it was really about the new generation of work. So there’s two pieces. It’s the generation that’s exiting the workforce and the generation that’s coming in. So the generation that’s coming in is Gen Z. I think that’s the one. But they’re really the idea of they’re the era of COVID they ended their college career. They came in from a workforce that was essentially their college was remote because all universities were shut down. Right? So then they come into this, oh, you want me to be in the office from eight to five. No flexibility. You want me to do this one job and that’s it. I think the Gen Zers, they’re the idea of like, okay, let’s be flexible, let’s learn new things. I’ve listened to a few podcasts around that and I really love the idea of flexibility, not only with the new generation coming in, but COVID has really put the idea of whatever, it’s like the best 40 or as long as you’re getting your work done, or it comes down to what is the best environment for you. Lack of burnout, lack of the craziness to get lost, the masses. It’s just not the same as the other generation. Which leads me to the other side of the conversation. Boomers are leaving, obviously. But then the idea I struggle. I’ve said this actual phrase twice out of my mouth and it makes me like cringe geriatric. Millennials. I’m close to that.
Chris Hesson [00:12:07]:
Millennial? Is that the phrase there?
Kortney Harmon [00:12:09]:
Okay, that makes me feel much better. Thank you, Chris. But it’s the idea that with their boomer parents that are retiring, they have trust, they have money that’s coming in or they have side hustles that they don’t have to work the straight 40. They don’t want to be at one job, at one place. So there is a lot of change in our workforce and we’re going to continue to have that struggle as more people are leaving the workforce. And we don’t even have the talent to fill what we have needs now and it’s only going to get worse. I love all those things that you said. And that, honestly, gives the idea for if you have a contract, you can go if that’s what your specialty is, you can also go learn something new, that maybe it’s not your specialty right now, or you have an ability in it, but to be able to when I was running a desk, it was really the idea of technology. And there were people that were taking jobs with Microsoft consulting services because it was latest, greatest trend. I want to go for that thing, learn that one thing, and then I want to go apply it somewhere else. So it’s just thinking creatively. And we need to do that for our organizations and our clients that we’re working with. Because let’s face it, if you can be that one stop shop, they don’t need to go to another vendor. They don’t need to go to another person to say, can you help me? Because you’re being able to solve all this.
Chris Hesson [00:13:17]:
It also ensures that the candidates have and learn different ways to approach problems. I remember recruiting from we were working with where they had a client who looked at a resume and said, wait, you mean this person only worked one place? They only know one way to do things. Not interested. Think of that. Think of how that paradigm shift exists now compared to I remember some of the first roles I had recruited on where job hopper was this bad thing. I think now you’re looking at, I want people who can approach this from multiple vantage points, who have learned different ways, have a wider breadth of experience contracting checks, a lot of those boxes. And for those who are up and coming in their careers and want the ability to grow, these are ways for them to get exposure to new projects, new things, bring value to new customers. And maybe they decide, I’m going to be a lifelong consultant contractor. That’s great. Maybe they decide, I’m going to use those skills and transition into a different type of role. That’s fantastic, but it gives you the flexibility when you need it or something to fill the gap when you need it.
Kortney Harmon [00:14:14]:
Yeah, I love that we’re going to go into some of these topics that we just talked about, but I want to see the flip side of the coin. Obviously the advantages of doing this, but what are some risk or challenges maybe firms could be aware of when venturing into this staffing industry alongside their direct hire services? Anything that comes to mind, whether it’s a concern or a challenge for them, their clients, or their talent that they’re working with.
Chris Hesson [00:14:37]:
Yeah, I think operationally there’s always going to be some change involved with this. Again, it’s a very different type of business model. It’s this diversification of product of what you’re offering now. You almost have this long term relationship where you, the candidate and that client are now married together, as opposed to once that guarantee period hits, you’re done. You don’t ever have to think about it again. So it could be scary having some of that responsibility, being able to check in. But that also is an opportunity for you to penetrate and have even more in depth relationships with your candidates and your clients as well.
Kortney Harmon [00:15:10]:
I know this comes down to verbiage and training your offices and we’re going to talk more about questions to ask for your talent and your clients that you’re working with. But I think it comes down to not being afraid to have those conversations. And I think for us as recruiters and leaders, we have to be well equipped to understand the challenges. So if you’re someone that is talking to talent, right, and we’re going to get more into this, if you’re a contractor, you essentially assume all of the risk, right? You’re working short term. You don’t have that safety net, but the reward for that risk is more money. Those people that you are placing out there, nine times out of ten, correct me if I’m wrong, Chris, and what I’ve seen, they’re making more money on an hourly basis because they’re assuming that risk. Do you have any thoughts behind that or anything else that recruiters and leaders should know?
Chris Hesson [00:15:56]:
Absolutely. They’re making more money from it. And I have worked with plenty of contractors who have been offered full time roles, and no way will they even consider it because it gives them that ability to say, I’m going to work this six month project. When it’s done, I’ve made enough money to take a three month vacation to Europe and then I’m going to come back and go work on something different. So that flexibility, I think, is really big and it gives them a bit more freedom. But you’re correct that freedom is associated with an element of risk. Consulting isn’t going to be for everybody, but ask the candidates you’re working with, have those conversations. I guarantee you they know people who are working in that capacity now, who want to be working in that capacity, who are interested in use that to build a very strong referral base, to really make introductions and inroads.
Kortney Harmon [00:16:38]:
I feel like my mother’s chirping in my head. Birds of a feather.
Chris Hesson [00:16:41]:
Kortney Harmon [00:16:41]:
Together, right? They all know all of the people. If you need someone else, they’re going to be able to tell you. So I love it. You talked a few minutes ago about operational challenges, right? So whenever you’re thinking operationally, what should leaders of talent businesses think of as they’re interested in this?
Chris Hesson [00:16:58]:
So the first thing I’d say is, there’s a lot here that you’re not going to know exists in the very beginning, and that’s okay. You’re entering this world. Where are you the employer of record? What do you have to do about taxes? Are there. What about W two S? W four s. Are you involved in that? Are there time cards you have to collect? There’s a lot of incredibly complex components that are involved. For those of you who are looking to dip your toes in the water, it probably doesn’t make sense to build out an entire compliance team and to manage all of those. There are organizations and companies that specialize in partnering with recruiting firms where they take all of that off your plate. My thought would be if you are a firm who is looking to break and make inroads, start with that, get a partner. Now they take generally a cut of whatever the bill rates and pay rates and margins are. But this gives you the way to get an introduction where you can alleviate some of the risk off yourself. So make it a little lower risk to your business to make inroads into this marketplace because there is a lot there and as you grow, I’ve seen more and more firms who start to bring those compliance and hiring components internally. There’s plenty even larger staffing firms that they don’t want to deal with it and I don’t blame them. If you’ve never had a time card, tuesday good for you. Can be a lot of work going after those.
Kortney Harmon [00:18:14]:
Yeah, that’s absolutely true. I love that. That’s a great insight. You mentioned something financially before that gap between getting paid from your clients and having to pay the people that are out on assignment. Elaborate on that concept a little bit more and what someone should think of as they start.
Chris Hesson [00:18:32]:
So typically on a consulting or working with a consultant or contractor, generally you are ensuring that that employee is being paid on a weekly basis. Weekly is pretty standard. It can vary depending on industry and role certainly. But you are most often paying that contractor before you get paid by your client. Which means there’s this intermediate period where you have to have enough liquidity and cash on hand to cover that. And I’ve met with some firms, even as last week, I spoke with a firm that had I think she had like, maybe five or ten contractors now, and she had the chance for 20, but was afraid that I don’t know if I have the liquidity to grow, to be able to cover that gap until I can get paid. And that’s something that again can be scary. For those of you on the direct placement side, set aside money for it if you’re looking to manage that internally. And again, there are options out there to look at partnering and getting bridge loans and things to cover that because having that annuity is huge. When you can get a regular $1,000 a week for each contract you have an assignment. What if you had 20 of them on assignment? What if you got $21,000 checks every week for the people you have on assignment? I don’t know. That’s pretty enticing to me. I wouldn’t say no.
Kortney Harmon [00:19:46]:
I love it, I love it, I love it. Okay, also operationally. So now selfishly I’m thinking ATS wise. So let’s say someone decides that they’re going to start asking the questions that we’re going to get to shortly. How do they make sure they don’t lose track of that? Because number one complaint is recruiters reach out too often. They get the information they need, they never follow back up. But I think they also don’t follow back up because of the idea that they’re not labeling things right in their system. They’re not tagging people to find them again because how many times do you see, and I assure it’s way more is people are going to say, I’m going to go start this search all over again whenever I have a contract need, now I’m going to go find a contractor. I’m not going to go to my system of record first and foremost, which should be the first place that you ever start. How do you ensure that you’re building those foundational building blocks in your system so all of your work doesn’t go?
Chris Hesson [00:20:35]:
I think building up recyclability is incredibly important. Ensuring that you operate in a niche space where you have the ability to reuse contractors on different assignments as you go forward, that’s going to be the number one thing you need to have a product that you can sell readily. Your goal is to be the specialist shop, not Walmart. If you are trying to sell everything to everybody, you’re going to have to start from scratch every single time. But if you can say, all right, I’m going to specialize in this type of role for this type of employer, you now have this base you can build up and then staying in regular communication with them. There’s always their sequencing tools. There’s drip marketing campaigns. Build that group up of who are those potential contractors? Yes, they may go on an assignment somewhere else, but stay in touch with them. Have a means of regularly ensuring you have communication, whether that’s an email or a LinkedIn message or a call once or twice a year to check in. And when you have those conversations, what types of assignments have they been on? What’s that next cool project that they want to work on? And for those who are actively working, when does their assignment end or when is it expected to end? Because just because someone is on a six month assignment for someone else doesn’t mean you don’t have the ability to pull them off and get them over to work at your shop as well. So building that relationship, and again, from an ATS standpoint, how are you tagging and defining that? That’s always going to be easier. The more niche you are, the smaller your market segment, the more defined. You can have information or tags be in that market segment.
Kortney Harmon [00:22:06]:
I love that. And you talked rolling people from assignment to assignment. I love some breed. Absolutely. So again, we talked with Sarah Gossen just a few weeks ago. Wow. Actually, it’s probably a couple of months ago. Again, checklist redeployment. If you haven’t listened to it, go listen to it. It is an amazing piece. You’ve already vetted the people that you need to talk to, that you need to hire. You’re able to get them out quicker on assignment. And I have seen redeployment go so wrong within so many organizations. Because they just don’t have line of sight of what’s actually happening, when their end date is, when they can roll onto the next assignment. And usually by the time organizations reach out to them, guess what? They’re already on their next assignment. Because those contractors that you’re putting on assignment are looking for their next contract when they start their current one. It’s just par for the course. So let’s go ahead and let’s talk about clients. How do you sell differently to those clients when maybe they don’t have the headcount internally to support? So maybe they’re telling you, no, I don’t have a need, I don’t have help. How do you even start that conversation? Chris, are there anything that you heard go well, anything that people need to listen for to be the trigger to say, oh, Daphne might be, I think, flexibility.
Chris Hesson [00:23:18]:
I’d mentioned that word before. That is the key selling point you have for your client. The ability for them to have a flexible and scalable workforce. As projects go up, they now bring on the people they need for that project. When that project ends, they can scale back down. Every organization is going to need a semblance of their full time employees to have on deck at all times. But as they are reacting to economic trends in the market, things are increasing and decreasing. This gives them the ability to have that flexibility. And what’s interesting is often contractor staffing spend comes from a different budget inside of corporate structures. And this is the part that I’m not an accountant, doesn’t make any sense to me, but a department doesn’t have budget to hire someone, but there’s an operational budget that they do have where they can scale or bring a contractor in. So from a budgeting perspective, often staffing is built in and deployed in different ways. That gives that department the ability to have the resources they need, but in a scalable fashion. So scalable and flexibility, those would be my really big selling points and conversation topics for any potential client.
Kortney Harmon [00:24:25]:
Yeah, because the work still needs done. This is the problem. Everyone is overworked right now. Their plate is overflowing. So listen to those pain points because that’s really what we need to pay attention for, for our clients. Well, I’m just not able to get the work done. I can’t hire a headcount. Chris is right, it’s on a different line item. I love that. And honestly, one thing to think about too is oftentimes those budgets are use it or lose it. So that like October to December time frame are amazing to be able to say, hey, is there any projects that you need to scale up on or you need to finish before end of year? Have you noticed the same thing, Chris? End of the year hot time frame. Use it or use it?
Chris Hesson [00:25:03]:
Yeah, the end of Q three. Really? Once you get past a halfway point in the year. I think people start looking back and looking at those operational budgets and what do I need to get done this year so I can start thinking about my goals for next year? So now we’re in not even June yet. Now is the time to really start hitting this hard and heavy.
Kortney Harmon [00:25:21]:
So as you start having conversations with those clients, what’s the best practice to say, okay, they’re interested in contract work. They may not have a need today, but they’re interested in entertaining a conversation. How do I not lose them in the future?
Chris Hesson [00:25:33]:
So I think continued engagement is always going to be a big one. Often you’re going to speak with clients who have future needs or future things. Use your database, document this, have scheduled regular reach out and conversations. And if you have someone on the hook who’s having that conversation of, oh, I don’t have anything now, but I may in the future, one of two things. One, they’re trying to blow you off and are way too polite. Or two, they have a legitimate need. Well, the best way to find out and make the most money is to have that continued follow up and really build that relationship. I’ve seen so many recruiters have those conversations and then never follow up, never back that up with additional talk, additional conversations. It’s always great to ask them, do they do any contract work today? Bet more and more organizations today than Pre COVID have experience with managing and working and using contractors. And those that have built those practices have had a lot of success in being able to have that scalable and flexible workforce.
Kortney Harmon [00:26:25]:
That’s very true. And then even using the idea you mentioned, like the sequencing tools or the AI, that’s just one thing to use in your back pocket in conjunction with all those reach outs. Right. Being able to facilitate the conversation. I think we get lost in the AI or the automation tools in this case to say, oh well, it’s going to follow up for me. They’ll let me know whenever I need something. But honestly, that’s not how this business goes. We really established a deep relationship with our clients. Whenever we’re having regular conversations, we’re understanding their pain points, we’re understanding their kids soccer game, whatever it might be. But it’s really the idea that you take the time to hear them and you ask the right questions. Beyond the transactional, this goes back to human basics. In our industry, there are a lot of times that you see people say, you know what, it’s transactional. You don’t need anything right now. I’m not going to follow up right now. And then they get lost in the shuffle. So I love that scheduling stuff, using your system to be able to track that.
Chris Hesson [00:27:23]:
Ultimately, recruiting was born out of this concept of management consulting, which means as a recruiting firm or staffing firm, you are there to solve problems for your client. Now the problems most often are solved by having the right people. But you are still identifying problems. You are still trying to find out what is the solution and is staffing the solution? Is direct placement the solution? Solution selling. If that’s not something you’ve done or been involved with that pain selling concept drive in, what is the underlying core issue they’re running into? You have those conversations, they have a project, they don’t have enough people start asking those questions, is this a short term project? Is this a long term project? Do they need people for just to get them over the next six months? Or is this where they need to bring them on as full time employees? If you can have those conversations and really work to understand the pain your clients are feeling, that’s going to give you insight on what is the proper solution. Is this a staffing solution? Is this a direct placement solution? And the more quivers or errors you have in your quiver, the more money you’re going to bring in.
Kortney Harmon [00:28:24]:
Absolutely. All right, so let’s change to the other half of the business. Let’s think about the talent that we’re talking to. I know you alluded to this a little bit in the beginning, but how can firms adapt their sourcing and recruitment strategies to effectively attract and retain temporary staff? It’s not necessarily we determine it’s not a whole new skill set.
Chris Hesson [00:28:43]:
My guess is if you look at your existing database, you have thousands of people that have experience with contracting or are doing it today. So looking for some of those keywords or components, project based consulting contractor, short term temporary items on resumes is a great start. People that have done it in the past are more likely to do it again in the future, I think, because speed is so important. Having that bench and building up those existing relationships with people you know is also really key as well. So this is one space where I would say finding people that are more active in the market, that’s going to be really important, because if you pick up a staffing assignment, generally we’re talking you have days or weeks. To make a placement. And weeks, maybe one, maybe two at the absolute most, because you’re probably up against another firm trying to get something in with that client as well. So don’t be hesitant to look for some of those words. But also, again, your existing candidate base, every single person, every single project, whether you’re recruiting them for a perm project or not, ask that question. Would you ever be open to caring about contract or consulting work?
Kortney Harmon [00:29:51]:
Just pepper that in more financial rewards. I think a common misconception, and I don’t know what your thoughts are, the common misconception of people in working contract, they oftentimes they think, well I don’t get benefits, I don’t get benefits, I don’t want to work contract for that reason. And there are a lot of that was something that I thought when I ran a desk, I don’t want to work that way because I don’t get that benefit. And honestly, it all depends who you’re working with.
Chris Hesson [00:30:16]:
It’s a misconception that working as a consulting partner or a contractor means you don’t have access to benefits and that’s not the case. And it also means that you as hiring and working on staffing roles doesn’t mean you don’t have the ability to offer them. Again, there are companies that specialize in partner where they will be the employer of record. They have this scale to provide benefits and you are really the person selling it, finding the talent and then you’re done. You hand it off. So it almost gives you the feel of direct placement to where you can wipe your hands and be done. And you just collect a check on a weekly basis. So don’t let that benefits concept scare you. Definitely do some research because there are ways that you have the ability to offer benefits to a couple employees or contractors without breaking the bank for you.
Kortney Harmon [00:31:02]:
That’s true. You also mentioned something about keywords like paying attention to temporary contract project work. I love and this is something that a lot of people don’t do. They use a resume as like a verification process. But also you have the ability to say, oh, they worked as a contractor at these places, maybe I should go call those places, see if they’re actively hiring, see if they actually, actually need help. A lot of times a resume just kind of gets overlooked as a date checker. But in reality, that could be a good strategy to really focus on bullseye of new clients as well, to see.
Chris Hesson [00:31:35]:
If do you remember, Courting, when we would have that training where we would bring a resume and there were like 40 pieces of information hidden inside the resume. And we would walk recruiters through what is all of the different sales, business development, recruiting data you can find from a single person’s resume. And that’s a great point. Again, if a company has used contractors in the past, well, there you go. They’re more likely or they have a process, they understand the benefit of those much easier sell and way for you to get in and begin working with them.
Kortney Harmon [00:32:03]:
I think I probably missed some of that 42 by the way. Nothing like a good old scavenger hunt. I love. I’m going to ask one more question. Depending on time, Katie will come on and beat me up if I don’t stop soon enough. So think about all of the people that you’ve worked with over the past. Can you provide me maybe some success stories or examples where firms effectively integrated contract staffing or staffing into their existing business model and maybe some key factors that were really behind that success? Because let’s face it, yes, it’s about asking the questions. Yes, it’s about talking to the talent. Yes, it’s about talking to the candidates or the clients. Yes, it’s about operations. But I’m sure there’s other stuff that we haven’t talked about that are contributing factors to success of the concept of staff.
Chris Hesson [00:32:49]:
Totally agree. And for me, I think it comes down to setting goals for yourself and holding yourself accountable. Contract staffing is not something that’s just going to happen overnight. There is no magic wand. There is no easy button where you push it and bam, you are now successful. Look at the businesses you’ve built on the perm side. That did not happen overnight. It took work, it took time, it took planning. Give yourself goals. What is your goal twelve months from now? My goal is to have ten contractors on assignment. Well, what are the steps they have to do to get to those ten contractors? What is that going to look like? Come up with revenue goals, come up with placement goals, come up with headcount goals. And there’s lots of resources online as well as ones Courtney can provide on partners to be able to work with you on that. But what do I have to do to get to that point? The biggest thing is have that goal for yourself. I think if you don’t do that, it’s like that New Year’s resolution. If I’m going to go to the gym, and obviously I haven’t. So there you go. Give yourself the tangible goal, share that with others, hold yourself accountable, and treat.
Kortney Harmon [00:33:52]:
Yourself like you’re your own boss. I heard something, and I don’t know if it was a TikTok a meme, if our boss would ask us to do something and be somewhere at a certain time, we would do it. We would be there at eight. We would hit the goal, we would do the things. But when we ask ourselves to do it, we don’t hold ourselves accountable. So for me, I know my downfall is if I don’t time block and I don’t have it on my calendar, I ain’t going to do it. So make sure that you’re setting aside time, whether it’s one call block a day or ten candidates that you’re talking to, out of that Power Hour that you have. Ask the question. Put a Post It note on your computer. Heck, I even use the virtual postit notes. They’re everywhere. But absolutely, I think that’s a great piece of advice.
Chris Hesson [00:34:30]:
Yeah. I had a firm we had worked with who that’s how they structured it. They set that goal, and their goal was, within six months, five contractors on assignment. So they looked at it and said their goal was to have 20 contract focused conversations a week from a candidate perspective, and 20 contract focused conversations a week with potential clients. And what’s crazy is they didn’t again, have to go and find new clients for this. They have the ability to tap into their existing client pool, use those relationships you have already you don’t have to start from scratch with your candidates or your clients. So don’t let that be the blocker. And when you’re at the point where I have a company who says they’re interested in contract stuff, I have a candidate who’s interested in contract stuff, you can now play the recruiting matchmaking game that you’re used to. It just moves much faster. The qualifying, the vetting, the level of screening you go through is very different. There are employees that a company will bring on as a contractor that they would not hire as a full time employee. And what’s crazy is they’ll pay even more for that person and you now have the ability to take a cut.
Kortney Harmon [00:35:37]:
In the middle, especially right now, today’s market, we’re having people, hard times finding people to fill these jobs. Think about how you can fill them creatively. Okay, Katie, I’m sure you’re going to come on any moment. I can call you like, I know that my husband. I’m going to leave it to you. I’m going to guess we have some ask me anything. I’m guessing Chris is the man of the hour. We’ve held our audience well, so we.
Katie Jones [00:36:02]:
Do have a few questions and everybody’s asked to remain anonymous, which is totally fine. So I’ll go ahead and ask. The first question that came in was that this person is in healthcare. Do you have any thoughts about how to position temp to clinical staff? Like nurses?
Chris Hesson [00:36:20]:
Yeah. So clinical is a very different animal as well. Even in the staffing side, the biggest thing you’re going to find is who is the employer of record and who is bearing that insurance. So for those of you in the clinical market, there might be some extra things and research to look into. I’ve mentioned there are companies that exist. This is not endorsement of anyone, but go to Google and look for employer of record services. Those are the types of companies that provide this where they come in. They are the employer of record, not you. They do the I nines, they provide everything. They even do and offer benefits. You essentially will just say, cool, go send this person over here to this company. They will collect time cards, they will invoice the client for you and they just write you a check on a regular basis. Look for companies like those because some of them will specialize and have platforms built specifically for the clinical side. There’s a big insurance barrier. Now, if you’ve worked in the per diem space as well, you may already have some of those insurances in place, but definitely do your research from that standpoint because once you get into that clinical side, the employer of record has a bit more burden to go and look at. Great market to get into. Again, did a lot in the healthcare clinical staffing side. Your margins can be incredible when you can be billing someone 150 an hour and paying out 45. Awesome. Now that burden in between gets eaten up by operational cost and insurance and other things that come into play. But you can still have an incredibly nice margin. There just might be some additional items. So if this is a new space you’re looking to start out into that clinical staffing, I would look at starting with finding a partner. From an employer of record services standpoint, it’ll just ease that transition until you get to the point where you understand what you need, you’re able to support a team in house and maybe you have the liquidity to fund paying employees while you’re still waiting for the bill or to receive the bill payment from your clients.
Kortney Harmon [00:38:11]:
I love that. This is Chris’s Pace. That was where he played. I didn’t play in that world. I’m not even going to pretend Chris answered it superbly.
Katie Jones [00:38:19]:
Thank you, Chris. So as you were answering, that kind of secondary question came in. So as you’re talking about things like healthcare that might have a Credentialing arm or component to it, how would you recommend handling that within your current system? Or would you need to bolt something on or get like an integration or what kind of system would you recommend for handling that kind of Credentialing?
Chris Hesson [00:38:47]:
So again, Credentialing will come down to are you the employer of record or not? For the most part, there might be some Credentialing that’s required as part of the placement. Again, an employer of record service is a great way because they handle all the credentialing, make sure that Licensure is up to date, people have what they’re supposed to, things don’t expire. And when you’re starting off, if you don’t have to worry about that, even better. A good ATS should have a way to manage documents, give you the ability to manage expiration date on licenses, set up the ability to manage checklist of what do I need to receive from candidates as part of bringing them into an employer contractor role. So a good ATS will have a lot of that information. If they don’t, there may be add ons, but there definitely are different services that could cover that.
Katie Jones [00:39:31]:
Awesome, thanks. Chris. How do you know what to price the work? And what type of markup are employers expecting to pay in general?
Chris Hesson [00:39:41]:
There is no easy answer on this. The variance is all over the place. A lot of it is very industry specific. Courtney, why don’t you because you work more in the It space, why don’t you share what you had in it? And I’ll kind of share what I’ve seen in healthcare and some other places as well.
Kortney Harmon [00:39:56]:
Just like you have that rule of thumb where you’re going to understand where you need to be. So, just like your direct hire concept, you make 30% of the first year’s total income, you’re going to do the same and you’re eventually going to have your own percentage that you need to hit for Markups. So MySpace was different. We actually were with Microsoft Consulting Services. Our bill rates were very large with that. So we sometimes had a bill rate of anywhere from $200 to $400 an hour. And we would find someone ninety dollars to one hundred and eighty dollars an hour. So they vary. Understanding where the space that you play, technology, cutting edge technology, you have the ability to have that concept of playing with that a little bit. You’re going to know your clients, but you’re going to get to a point to say, I know I need to be at 30%, I need to be at 30%, burden what my operational costs are, but truly understanding all those pieces that go into it and what you need to make on an hourly basis. Go back to that idea. If you could make X number of dollars a week, times that by 13 contractors. There were times again, Chris mentioned I had one of those workers that started a six month assignment and was on assignment for essentially seven years. Who doesn’t want that kind of success? And honestly, maintenance, that person was boots on the ground. They were giving me new sales opportunities. The idea of giving me additional people. So, again, what is it worth to you? And what do you need that effort to be when you’re already having these conversations? Just tagging on an extra question or two questions, Chris. I don’t necessarily know about your space.
Chris Hesson [00:41:30]:
Yeah. So there’s a couple of key variables that go into calculating some of that. First, you need to know again, what is the pay rate you’re looking at for the candidate? Because that pay rate is going to determine a lot. What is the tax that needs to be associated with this? Is there insurance that needs to be associated with this? What are your internal costs? Because your ultimate goal is to get to that. What is your gross margin, where it’s the bill rate minus everything? Pay rate, taxes, PTO, whatever, all is included. You make the difference there on a per hourly basis. So if we had a nurse out again, we might bill a hospital or a long term care facility, 75 an hour. We might be paying them 35. In that difference between the two, we have to make a profit. And for us, our goal is maybe 30%. I’ve seen variance again anywhere from 20% to 70%. Markup depending on what space, how high the role is. Generally, the higher you go up the food chain, the bigger those percentages are going to be as well. You place a really top notch developer, or even an interim role that’s something we didn’t mention the word yet. Interim companies will get a CFO on an interim basis, a CEO on an interim basis. Wouldn’t it be nice to get a cut of a CEO’s hourly rate for six months or a year as a company is transitioning over? So another word for you to talk to your clients as well. On the leadership side is interim, but ultimately industry variance is going to depend. But generally I’ve seen between 20 and 70%. Markup is fairly typical. Cool.
Kortney Harmon [00:43:04]:
Love it. Thanks.
Katie Jones [00:43:05]:
Like I said, this is a very active Q and A. We’re going to probably go right up.
Kortney Harmon [00:43:09]:
Well, worst case scenario, Katie, we can always bucket anything and we can follow back up and also put it on our backup, so good point.
Katie Jones [00:43:16]:
Okay, this next question is about how to handle W Two S versus 1099. Traditionally this firm has done 1099 in the past, which is their preference, but with so many tax changes, there are talks that they possibly might need to move to a W Two, but then that makes the liability fall on them and they’ll deal with employee taxes. They focus mainly on corporate roles. Just kind of wanted to get your guys’thoughts on that.
Kortney Harmon [00:43:42]:
We really didn’t do 1099. Whenever I was running a desk, it was really the idea of hourly or salary just based on liabilities. That was what our accountant wanted us to do and that was the line of business that we wanted to run. Chris, any additional?
Chris Hesson [00:43:56]:
Yeah. So this is definitely a conversation to have with your CPA, to have with your business attorney. I’m not an attorney. I’m not a CPA. Don’t have that yet. Those are conversations I think you really need to have. There’s always going to be pros and cons with each one, but again, I’m going to stress what I did before. For those of you who are looking to make an entrance into this, you don’t have to have the burden of either. There are places you can turn and organizations out there that will handle that for you. So don’t let that be the factor that scares you away from having that annuitized income or revenue stream for your firm.
Kortney Harmon [00:44:29]:
Love that. Absolutely deeper conversation beyond lots of other questions to be answered on that one. Thanks.
Katie Jones [00:44:35]:
No, I kind of figured that was the answer, but I just wanted to get general thoughts. Two more questions. The first one is, katie, can you please drop this handout that you promised at the beginning of the episode?
Kortney Harmon [00:44:49]:
And the answer is yes. Katie, can you please drop this handout?
Katie Jones [00:44:52]:
Yes, I will drop that in just a second after I ask this next question. And this next question is that this is a firm that is concentrated only on staffing. They don’t do any direct placement at all and they are just kind of the market shift that they’re starting to feel. Just looking for any additional tips, advice, tricks. What else do you got in the bag?
Kortney Harmon [00:45:13]:
Chris, do you have any words of wisdom for staffing firms in today’s market?
Chris Hesson [00:45:17]:
Yeah, now is the time for expansion. On the staffing side, it’s interesting, there is this pendulum swing between it being a candidate driven market, a client driven market. Are companies hiring on direct placement? Do they hire on staffing? And what’s very interesting is when direct placement is up, staffing is down. When staffing is up, direct placement is down. Well, we’re coming off a two year post COVID boom where a lot of recruiting firms on the direct placement side have not had to sell very hard. It’s been fairly easy because the demand is so high for top talent from a candidate perspective that recruiting firms have been setting records in revenue over the last couple of years. But that pendulum is beginning to shift the other direction. Now is the time to get ahead of that because staffing is now going to be on the upswing. Like Courtney said before, the work has to get done no matter what. Well, if they’re not getting it done with full time employees who are the result of direct placement, they’re going to have to get it done through contractors. So if you’re working in the staffing space today, are there departments you can expand into? Are there segments inside your existing client base you can look at? Are there similar skill sets that your candidates have that you can expand into new markets? We used to teach the concept of pivoting. If you’re going to pivot, you either want recyclability to be able to sell new things in your existing clients or you need new clients to sell your existing candidates too. You don’t want to do two brand new things at once. It’s a lot. That’s too much. That’s too hard. You want a way to pivot. I want to make it easier on myself. So if you’re in staffing already and you do accounting and finance, what about HR? What about legal? Are there other very similar spaces that you can start to dabble in where you can keep a consistent client base? Or are there other places you could now send those candidates out to? Maybe parallel industries or something, where there’s a semblance of growth in that maybe your current market doesn’t have?
Kortney Harmon [00:47:06]:
I love it. That’s great.
Katie Jones [00:47:07]:
Thank you so much, Chris. I have one last question before we wrap up and just if there anybody who I didn’t get to if you want to go ahead and send us an email at [email protected], I’ll drop that in the chat too. Please do. And we want to make sure that we get to your questions, but this will be the last question and Chris, this question is actually specifically for you. How did you convince nurses to take contract work? What was that talk track like?
Chris Hesson [00:47:32]:
Money talks. And here’s the cool thing about contract. A nurse will make more per hour working contract or per diem than they would working as a nurse for a hospital, being employed directly by them. That’s really what it comes down to. So the type of nurse that is going to work contract is maybe one who doesn’t need to worry about the benefits doesn’t need the stability. They want the flexibility more than anything else. When you have the ability to say, hey, you’re making 35 an hour working for the hospital, I can pay you 45, I can pay you 50 to come do it for me, that’s where it really comes down to. And the biggest benefit to the candidate is the flexibility. But the flexibility that goes along with making more money on a per hour basis. So that’s generally what I look at. If you’re talking to nurses, what are you making now at an hourly rate? And asking these hypotheticals, if you were making 15 more an hour, would you be interested in a contract, six month contract? Have those conversations, find out what their interest in is. Have they worked contract before? I’m sure you’ve heard travel nursing is at all time high. I live in Cleveland. The Cleveland Clinic. They’ve gone through such a big change because so many of their nurses are going off in travel assignments other places that they’re having to hire travel nurses to bring them over here. Well, do you know who’s benefiting them? Person in the middle who’s moving all the pieces around on the board and able to have that margin that they’re recouping all the way through.
Katie Jones [00:48:52]:
If you guys have any questions that Kortney and Chris didn’t answer today, like, come up later as you’re thinking about this or as you’re looking at the download, feel free to email us at [email protected]. And with that, I’m hopping off and.
Kortney Harmon [00:49:03]:
You can have that. Awesome. Thank you. Katie, great questions today. Chris, as always, thank you so much for joining us today. I guarantee we’re going to have emails or questions in our email today, so thank you for joining us.
Chris Hesson [00:49:14]:
Awesome. Thanks so much for having me, Kortney.
Kortney Harmon [00:49:16]:
Absolutely. As staffing and recruiting and operations leaders, you need to realize the unlock that offering multiple lines of business can be for your clients and your candidates. Not only are you becoming that one stop shop for all of their needs for your talent and your clients today, but also for their future. You’re also self serving for your organization to proactively stay with the market changes when they happen. Remember, direct hire slows down staffing increases and vice versa. Don’t forget to download our staffing checklist in the chat or the show notes of the podcast. It’s going to help you facilitate those conversations with leaders around how to focus on the four main areas when adding additional lines of business. Remember, we’ve talked about funds, operations, how to sell to clients, how to sell to talent. So thank you so much for joining us today. I’m Kortney Harmon with Crelate. Thanks for joining the full Desk Experience Workshop. I’m Kortney Harmon with Crelate. Thanks for joining the full Desk Experience. Please feel free to submit any questions for next session to [email protected] or ask us live next session. If you enjoyed our show, be sure. To subscribe to our podcast wherever you listen and sign up to attend future events that happen once a month.